In this article, you will learn…
- The importance of making your estimated tax payments for your small business,
- When to issue 1099s for contractors and freelancers, and
- Whether or not to run personal expenses through a business account.
What Should I Do If I Failed To Make Estimated Tax Payments For My Small Business?
If you failed to make estimated tax payments for your small business, you should pay as much of the tax that you feel will be owed before you file your tax return.
When you file your return, you will have to pay the rest of the taxes. A tax attorney cannot do much in this situation. If you have a very good reason that you cannot pay the estimated taxes, a tax attorney may be able to have the penalties that may have been charged removed.
My Business Did Not Make Any Money In 2021. Do I Still Have To File My Tax Return?
In almost all cases, even if your business was not successful in 2021, you will still have to file your tax return. Even if you didn’t make an income, you should still file a tax return – both because you are required to, and because it may be advantageous later on to have filed a return showing no income for the year.
When Does A Business Have To Issue 1099s For Contractors And Freelancers? How Can That Affect My Taxes?
Any time your business pays more than $600 to a person who does any work for your corporation and no taxes are withheld from that payment, you must file a form 1099. That is a deduction for you to use.
Can I Or Should I Run Any Personal Expenses Through My Company?
You should never run any personal expenses through your company business account. This is one of the primary things the IRS looks for in an audit. If they find you’ve been paying personal expenses with your business account, that only increases your income and you will have more taxes and penalties to pay.
What Can Business Owners Do To Facilitate Next Year’s Tax Filings?
To facilitate next year’s tax filings, business owners can…
- Keep a current profit and loss statement month by month.
- (This is not only good for taxes but helps you to know the status of your business so that you don’t get behind in areas. )
- Maintain all of the receipts you are going to use as a deduction, month by month, and keep them categorized into different areas of use.
When Should I See A Tax Attorney Rather Than An Accountant?
If you are talking about preparing your tax returns, most accountants and CPAs are just as good as tax attorneys. You should always ask how much experience your accountant or CPA has for your particular needs.
If there is any problem with the IRS, you should always go to a tax attorney. Most accountants and CPAs really do not want to deal with the IRS.
Should A Small Business Owner Consider Himself An Employee Or An Employer For Tax Purposes In 2021?
If you are a sole proprietor who reports the business on Schedule C, it makes no difference if you consider yourself an employee or an employer for tax purposes.
If you have a corporation or LLC, then you should take a salary. That helps your taxes. Your profits from the business and your salary income are taxed two different ways, which makes taking a salary advantageous.
What Does Your Gross Income Actually Cover?
Gross income for the business is every dollar that comes into the business, whether from…
- Interest earned, or
- Any other means you might obtain money for your business.
A product is an inventory item, not an income item, so would not be included in your gross income.
What Are The Common Reasons Small Business Owners End Up Owing The IRS?
The most common reasons small business owners end up owing the IRS are…
- You fail to pay your taxes,
- You pay your taxes late,
- You underpay your employee tax withholdings.
Employee tax withholdings are withheld from the employees’ paychecks. That carries over into your filings of 941s and quarterly reports. If you are late or have not filed, that generates penalties that must be paid.
For more information on Filing Taxes For Small Businesses In SC, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.